BrazilThe top 8 priorities for CEOs in 2024 (according to McKinsey)
In 2024, CEOs will be focusing on a range of issues that they cannot afford to overlook. With much changing and much on the line, McKinsey & Company has laid out the top 8 priorities for the top job this year. Perhaps unsurprisingly, generative artificial intelligence (Gen AI) and digital have topped the list.
The past few years have thrown many existential challenges at business leaders around the world. From the pandemic to persistent inflation, supply chain disruptions to wars – CEOs have had to make tough decisions.
In this year’s edition of McKinsey & Company’s annual outlook on what matters most to CEOs, it is clear that 2024 will likely be no different. A rundown of the top eight priorities for CEOs in the coming twelve months.
1. GenAI
When it comes to keeping up with technological innovations, there is no doubt that AI has become an essential component to any successful strategy in an incredibly wide range of different sectors. New GenAI tools – ChatGPT foremost among them – have created a whirlwind of interest, huge amounts of investment, and have completely changed the way many companies operate day-to-day.
Some companies have moved to acquire their own AI-focused firms in big deals, hoping to create their own proprietary AI tools, while others have made AI expert hiring a priority. A previous McKinsey report showed that GenAI, if fully taken advantage of in all its forms, could contribute from $2.6 trillion to $4.4 trillion to the world economy annually.
2. Leading in digital
The report notes that business leaders will continue to take digital transformation seriously this year. Whether in AI or other digital innovations, being a digital leader means having an effective strategy and the right team to be successful with that strategy.
With about two thirds of companies not fully reaping revenue benefits from their digital transformation efforts, CEOs and the rest of the C-suite need to coordinate carefully.
3. Transitioning to net zero
What more can be said? There is simply no more time to waste when it comes to climate change – and organizations actually have a lot to win from spending big on going green. While there was much talk of net-zero goals last year (reaching a crescendo in Dubai with COP28), there has still not been enough solid action, by most estimates.
More businesses need to roll out sustainability-focused ventures in order to pull ahead of the competition in offering substantive value in sustainability.
Meanwhile, in the energy space, to reach net-zero targets, a set of existing climate technologies would need to scale exponentially by 2030.
4. Fostering a special ‘superpower’
Companies should look to master that one special offering that sets them apart from the competition. In order to navigate the huge array choices of where to put their priority, CEOs should focus on developing their ‘superpower’. CEOs understand that success in competitive markets involves strategically building and using superpowers, which are a combination of talent, processes, and technology that can create huge value.
In demonstrating the importance of the priority, McKinsey’s experts point at a previous study which found that 80% of most organizations’ total growth comes from their core.
5. Glory to the middle managers
Companies are increasingly recognizing the crucial role of middle managers in their organizations. They play a key role in driving performance, ensuring organizational coherence, and fostering employee engagement. Understanding and leveraging the potential of middle managers is vital for sustained success in today’s business landscape.
6. Focusing on growth – courageously
CEOs will continue to focus on bold and innovative approaches to drive sustained growth and maintain a competitive edge in the market. That will require proactive and ‘courageous’ measures in areas such as customer engagement, market expansion, and organizational agility.
“Companies that err on the side of caution, especially during turbulent times, may survive to see another day but often fail to achieve their full growth potential,” notes McKinsey.
Tapping into the power of mergers & acquisitions is one channel that is described as courageous. For example, a typical company grew at a measly 2.8% per year during the ten years preceding Covid-19, and only one in eight recorded growth rates of more than 10 percent per year. However, companies that made acquisitions manged to book stronger growth.
And when mergers & acquisitions are delivered robustly (McKinsey calls this ‘programmatic M&A), then deals also translate into better performance, higher returns, and enhanced shareholder value.
Another courageous strategy McKinsey highlights is ‘shrink-to-grow’. Sometimes, CEOs may face the need to shrink the business, divesting slow-growing parts of your portfolio, and then using those proceeds to invest into new, more promising areas. CEOs that successfully managed to execute this strategy have led their companies into higher and more sustained growth rates.
7. Getting comfortable with geopolitical uncertainty
“The global order still reels from disruptions related to the war in Ukraine, including those in energy, food security, supply chains, and more. A central concern among global CEOs who speak with us is whether and how they will contend with additional geopolitical ruptures when they occur,” notes the McKinsey report.
Nearly every company is interconnected with the external world in a complex way – but anticipating major global events is challenging. Though no one can predict the future and many companies can hardly avoid escaping the effects of a major world events, learning from the past and having contingency plans in place for various different scenarios can help greatly in minimizing damage when a new crisis does eventually emerge.
8. Not holding their breath for macroeconomic certainty
Some CEOs insist on looking for solid ground when it comes to economic stability – but that seems an unlikely prospect. Successful CEOs embrace uncertainty by evaluating their risk tolerance and making investments during downturns. With proper planning, CEOs can identify the ideal actions to take regardless of economic trends.
